Tribe’s roll of dice rattles lenders

LEDYARD, Conn.—Michael Thomas, a Pequot Indian with a brash leadership style and a checkered past, was a driving force behind turning Foxwoods Resort Casino into one of the world’s largest casinos, and for making tribal members rich in the process. These days, he’s being cast as the man who triggered a financial crisis.

[…]

The financial mess on this tiny reservation in rural eastern Connecticut has rattled the once-booming business of casinos run by American Indians, drawing attention to the ramifications of their unique legal status. Tribal-owned casinos can’t be forced into bankruptcy, many experts say, because tribes are sovereign nations. And federal law allows no one but Indians themselves to operate casinos on reservations, which effectively prevents creditors from seizing them and selling them off.

The showdown between the Pequots and their lenders, which include Bank of America Corp. and Wells Fargo & Co., has raised what was once an unthinkable question: What happens if a sovereign tribe defaults?